Before the need to file a claim, understand your insurance policy

It is easy for a home or business owner to look for the cheapest insurance premium, sign on the dotted line and pay the minimum amount due. However, many do not realize is that they may not have sufficient coverage until they need to file a claim. Understanding the details regarding a commercial insurance policy can help ensure business continuity and get life back to normal faster.

Tips for Making Sure You Have Enough Coverage:

• Find an insurance agent or broker authorized to advise you on insuring your home or business properly. Agents typically represent one insurance company, while brokers represent several. Make sure the individual has a license to sell the line of insurance you are looking for and has experience in the insurance field.
• Tell your agent specifically that you want your home or business properly insured with full replacement coverage. Full replacement coverage will cover the cost of the home or the building in which the business is located, plus the contents inside.
• Know the limits of a replacement insurance policy. Many policies offer extended replacement policies that have a cap on the amount an insured is paid to replace a home or building, plus an additional amount of up to 25 percent of the policy limit if the original limits do not cover the contents damaged.
• Know what the policy does not cover. Often, home and business owners must separately purchase flood insurance, which covers damage caused by water. What some policyholders do not understand is that a regular insurance policy for a home or building may not cover damage as a result of a problem within the building, such as a burst pipe. It is a good idea to review with an agent the losses an insurance policy does not cover.
• Review your insurance policy annually. Meeting with an insurance agent on an annual basis can help prevent a policyholder from not having enough insurance. Things to tell an agent about include additions to a home or business, expensive items located in the building, changes to the layout of the building, the installation of a pool and so on.

While it is the responsibility of an insurance agent to make sure a client has sufficient coverage, it is up to a home or business owner to make sure they have the coverage they want. Knowledge about a policy and good communication with an insurance agent can prevent an individual from being underinsured.